The important issue of multinational tax avoidance has reared its ugly head once more, with ABC’s The Business running the above segment last night featuring an extraordinary raft of allegations from a 32-year veteran industry insider turned whistleblower, George Rozvany.
Specifically, Rozvany claims that the Big Four accounting firms – PwC, Deloitte, KPMG and Ernst & Young – have perpetrated “the greatest tax crimes in history” by assisting companies to undertake aggressive tax minimisation schemes that have cost countries at least $US1 trillion in lost tax revenue worldwide and $50 billion in Australia.
Rozvany, who is Australia’s most published author on transfer pricing, argues that sham transfer pricing arrangements are now “out of control”;
“Transfer pricing behaviour clearly is the greatest concern because it’s very easy for a transfer pricing expert to dress up a sham transaction as a real commercial transaction”…
“I’m talking about service arrangements, intellectual property transfers, such as patents or use of patents, and perceived transfer of goods, sham loans between related parties, but in reality it’s all about providing services at too high a price which then shifts [income] to a lower tax jurisdiction.”
Rozvany believes that the Big Four accounting firms should be broken-up and their tax and audit functions split into separate firms. He has also called for stiff penalties for corporate tax scams, including jail time for company heads.
It’s a theme that has also been picked-up in an article by Michael West published today in the New Daily, whereby West similarly fingers the Big Four accounting firms as the master-minds behind multinational tax avoidance, also drawing on George Rozvany’s testimony:
While the Big Four piously advise governments on tax reform, Mr Rozvany argues they are also busy advising their multinational clients how to avoid paying tax.
“They are both architect and engineer,” says Mr Rozvany. “They sell the (tax avoidance) schemes to the multinationals, and in the case of the LuxLeaks scandal, they arranged the deals in secret with government, to the detriment of all other sovereign nations and their taxpayers”…
“This is not a victimless crime,” he says. “While Western governments have been cutting back their aid to the most underprivileged in society, from the homeless to orphaned children in Africa, multinational companies have been diverting ever larger profits into tax havens.”
“The global community must also recognise the links between aggressive taxation behaviour, money laundering, corruption, organised crime and terrorism, of which the Brussels bombings and 9/11 are chilling reminders”…
That the Coalition can even consider gifting foreign owners/shareholders a 5% company tax cut beggars belief in light of these allegations.
